Online video has grown rapidly in Australia in recent years, as in other parts of the world. This article provides results from an analysis of the state of this sector conducted in 2011. First, it summarizes overall audio-visual media usage in Australia, including online and other media. Second it explains the methodology and results of an analysis of 25 websites over the year from June 2010 to June 2011 and notes some qualifications about the state of online video measurement. These sites were selected because they are popular online sources of fiction content. Third, it describes the main features of the 25 sites, including the types of content offered, the delivery technologies and the business models. This work is part of a larger project that aims to quantify the changing ways Australians are watching and engaging with audio-visual stories across the cinema, free-to-air and subscription television, consumer/DVD, online and mobile sectors. The larger project, 'Spreading fictions: Distributing stories in the online age', is being conducted from 2010–2013 by The Swinburne Institute for Social Research in Melbourne and the University of Sydney, supported by the Australian Research Council, the Australian Broadcasting Corporation (ABC) and Screen Australia. The focus on narrative fiction content reflects the high priority given by successive governments in Australia and overseas to policies encouraging the making, promotion, screening and discussion of local audio-visual works, especially feature films, adult and children's TV dramas and documentaries. These policies are based on the high cost of these formats relative to the revenue-earning capacity of national markets. Challenges to these underlying economics are coming from at least three related directions: technology, audience behaviour and business models.